Supermarket margins—revenues minus wholesale costs—fell 2.4 percent in 2010 from 2009 levels as supermarkets dealt with slow economic growth coupled with rising costs in the 2nd half of the year. Margins continued to fall in the early months of 2011 but then turned around by mid-2011. Margins are now up 5.1 percent from 2010 levels as supermarkets attempt to return margin trends to pre-recession levels. The extent to which input costs such as commodities and fuel are passed along to consumers will have a significant impact on retail price inflation for 2012. —source
The following graph is from a new USDA Report of the Food CPI and Expenditures. I have circled all categories that have risen by more than 5%.
You will note that 2009 prices were overall neutral since grocery stores have been trying absorb some of the cost increases for the ailing consumer. One could conclude that our ethanol policy in addition to higher fuel costs are underlying causes of the higher food prices, which exceed most other inflation categories, according to the Bureau of Labor Statistics.
The categories which have risen the most: meats, eggs, dairy, fats and oils, and fish and seafood.
Note: Bolded entries reflect changes from the previous month’s forecast. Green arrows indicate an increase and red arrows indicate a decrease in the forecast from the previous month’s forecast.
1BLS-estimated expenditure shares, December 2010. Food prices represent approximately 14 percent of the total CPI.
2 Forecasts updated by the 25th of each month.
Sources: Historical data from Bureau of Labor Statistics; forecasts by Economic Research Service.
***To see how food price indexes changed from 2003-2008, click here.
***Also see my previous recent post: Food at Home Price Index has increased 6.3% and the Dairy Index is up 10.2% in the Past Year.
This is a good discussion:
…because shoppers think its fresher and healthier there.
U.S. sales by the 20 largest food retailers totaled $404.2 billion in 2009, amounting to 64.2 percent of U.S. grocery store sales, an increase from 39.2 percent in 1992. Although shares held by the largest 4, 8, and 20 supermarket and supercenter retailers decreased slightly from 2008 to 2009, the longer term trend shows an increasing concentration of sales among the Nation’s largest grocery retailers. Contributing factors to these increases over the past decade include mergers and acquisitions among food retailers and the rapid growth of Wal-Mart supercenters.